Waco Texas Economic Report for February 2011

Every month the Waco Chamber of Commerce and First National Bank present an report on the Waco economy compiled by economist Karr Ingham. The latest report was released yesterday. Tax revenue and car sales were up. Building permits and home sales were down. Below is the full report.

Taxable spending in the Waco area reached an all-time high in January, with 10 local cities showing a combined 9.3 percent increase in sales tax rebates from January of last year.

That's according to the Greater Waco Economic Index, which was unchanged from December to January at 103. The unchanged index broke a string of seven months of declines.

Robust spending may or may not continue in coming months, "but it does represent an important step in the ongoing recovery process," Amarillo-based economist Karr Ingham said.

Ingham prepares the index each month under the sponsorship of First National Bank of Central Texas and the Tribune-Herald .

He takes data from different areas of the economy to measure local activity. The index uses historical data going back 10 years, with a base line of 100 set for January 2000 for comparison.

Besides enjoying increased spending, Waco saw building permit activity increase sharply in January. The value of projects for which permits were issued rose nearly 70 percent compared with January 2010.

That's the good news, but Ingham added, "Building permit numbers are much more randomly volatile than a number of economic indicators, so January 2011 relative to January totals in prior years has less meaning than in some areas of local economic measurement simply because one month does not a trend make."

For example, the value of projects for which permits were issued during the 12 months that include January 2011 is down more than 45 percent compared with the year that includes January 2010.

"Still," Ingham said, "it is encouraging to see the year begin with strong total construction numbers, which points to the possibility that the building business will recover in 2011 relative to a down year in 2010."

During a presentation on the report Wednesday at First National Bank of Central Texas, builder John Erwin said public-sector projects account for much of recent commercial construction activity and may distort the totals. He listed as examples University High School, the Waco Convention Center and the new West Waco Library.

"Construction is still very difficult right now," he said. "As a whole, contractors are running on bond projects but not much private-sector activity."

The housing market, meanwhile, continues to have room for improvement. The 23 permits issued in January for new-home construction are down from the 28 in January last year.

And existing home sales dropped from 122 in January of last year to 115 last month.

"That January sales total is low compared to January sales for most of the recent decade," Ingham said.

But Ingham said the Waco metropolitan area can't complain about home prices.

The average price of $127,307 in January was down 4 percent from January 2010, but it was higher than any other January since the first year for which Ingham tracks data.

At Wednesday's meeting, Bland Cromwell of Coldwell Banker Jim Stewart Realtors, said he has seen no sign of falling home prices since 2009 and 2010. He said the firm he works for has 50 percent of the real estate market share here.

Cromwell said overall, the recent real estate trends here have been flat, "but most of America would have loved to be flat."

The index shows motor vehicle spending remains higher compared to year-ago levels, with inflation-adjusted spending on new and used automobiles up 5.4 percent compared to January last year.

The Texas Workforce Commission has not yet released data for January, so Ingham estimated that payroll employment last month was up 1.5 percent from January of last year.

He estimated the unemployment rate dipped from 7.4 percent to 7.2 percent.

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